Tobacco Documents Online

AMENDED ING 1~E MAY_2 1991~~~ ~ AMENDED IN SENATE MAY 6, 1991 AMENDED IN SENATE APRIL 10, 1991 SENATE BILL No. 260 Introduced by Senator Hart January 30, 1991 An act to add Section 1203.050 to the Penal Code, relating to probation. . . . LEGISLATIVE COUNSELS D[GESP . SB 260, as amended, Hart. Probation: corporations. ~ Existing statutes provide that for purposes of the Penal Code, the word "person" includes a corporation as well as a natural person. Case law has recognized that corporations are proper criminal defendants. ~ This bill would authorize the court, without limitation on its powers to order probation for a oorporate defendant pursuant to other law, to consider probation for any corporation convicted of specified violations of law. The bill would specify certain enumerated and appropriate terms and conditions of probation, but would not limit it to the enumerated conditions, and the bill would provide the sentencing court with alternative dispositions to impose upon the corporation, if it violates a aonditipn of probation. ~. To the extent that failure to comply with the court order could result in a criminal contempt, the bill would expand the scope of an existing crime, thereby imposing a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated ~ by the state. Statutory provisions establish procedures for l making that reimbursement. 96 so TCAL0230967

SB 260 This bill would provide that no reimbursement is required by this act for a specified reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. The. people of the State of California do enact as follows: 1 SECTION 1. The. Legislature finds and declares all of 2 the following: 3 (a) Most businesses in the state are law-abiding 4 corporate citizens helping to make California one of the 5 most economically productive and environmentally 6 attractive areas in the world. 7 (b) Some courts in this state have placed corporations 8 on probation. However, the absence of specific legislative 9 direction about appropriate probationary conditions for 10 corporations has minimized the use of this important 11 sentencing tool. 12 (c) It is, therefore, the intent of the Legislature to 13 encourage California's courts to utilize probation, in 14 addition to fines and restitution, when appropriate, for' 15 corporations convicted of serious environmental, worker 16 safety, or financial crimes, and to provide the courts with 17 clear guidance about appropriate probationary 18 conditions. 19 SEC. 2. Section 1203.050 is added to the Penal Code, 20 to read: 21 1203.050. (a) Without limitation on the powers of the 22 court to order probation for a corporate defendant 23 pursuant to other law, the court may consider probation 24 for any corporation convicted of one of the following 25 violations of law: 26 27 28 .(1) A felony conviction pursuant to Division 5 (commencing with Section 3700), Division 20 (commencing with Section 24000), or Division 26 29 (commencing with Section 39000) of the Health and 30 Safe,ty Code, Chapter 2 (commencing with Section 5650) . 31 of Part 1 of Division 6 of the Fish and Game Code, 32 Division 7 (commencing with Section 12501) of the Food 33 and Agricultural Code, Chapter 7.4 (commencing with TCAL0230968

-3- SB 260 I Section 8670.1) of Division 1 of Title 2 of the Government 2 Code, Division 1.5 (commencing with Section 90) of the 3 Harbors and Navigation Code, Division 30 (commencing 4 with Section 40000) of the Public Resources Code, or 5 Division 7 (commencing with Section 13000) of the 6 Water Code, or a misdemeanor conviction of one of these f 7 offenses which was found by the court to be part of an V 8 established pattern of intentional, reckless, or grossly 9 negligent corporate conduct and the. corporation had a 10 prior conviction of one of these offenses or resulted in, or 11 created a substantial likelihood of, severe damage to the 12 public health or the environment. 13 (2) A felony conviction pursuant to Division 5 14 (commencing with Section 6300) of the Labor Code, or 15 a misdemeanor conviction of one of these offensesfound 16 by the court to have resulted in a loss of human life or to 17 have created a substantial probability of death or great 18 bodily harm to one or more persons. 19 (3) A felony conviction pursuant to Division 1 20 (commencing with Section 99), Division 2 (commencing 21 with Section 5000), Division 5 (commencing with Section 22 14000), or Division 7 (commencing with Section 18000) of 23 the Financial Code; Title 1(commencing with Section ,~ 24 100) of the Corporations Code, or Chapter 4 25 (commencing with' Section 17000) of Part 2 or Chapter 1 26 (commencing with Section 17500) of Part 3, of Division 27 7 of the Business and Professions Code, or a misdemeanor 28 . conviction of one of these offenses that was found by the 29 court to be part of an established pattern of business 30 practice that resulted in significant economic injury to 31 the public. 32 (b) Probation ordered pursuant to this section shall be _ 33 for the purpose of preventing future offenses by the . (~ 34 corporation and shall not be subject to refusal. As used in 35 this section, the term "corporation" shall refer to a 36 corporation operated for profit and shall not include a 37 nonprofit corporation or any corporation as defined in 38 subdivision (b) of Section 13401 of the Corporations 39 Code. 40 Nothing in this section shall limit a court's other powers TCAL0230969

260 . - 4 - to place a corporation on probation. ~ (c) Probation conditions shall be set forth with specificity and shall be reasonably calculated to reduce the likelihood of future criminal behavior similar or related to the instant offense. The economic impactshall be considered by the court in determining the reasonableness of any probation conditions. The court ~) shall state on the record the basis for its finding that the terms and conditions of probation, and tbeir associated costs, are reasonable in light of the violation or violations sought to be prevented. (d) Without limiting the court's discretion to impose other appropriate conditions of probation, the court may, as conditions of-probation, order the corporation to take one or more of the following actions: (1) Prepare a report for the court recommending the programs to be developed by the corporation to avoid similar violations of law and adopt and implement the specific corporate programs the court deems appropriate. (2) If probation is imposed by the court }~rier te without trial, prepare a description of the instant offense, to be filed with the court as a public document. (3) Designate one or more special compliance officers within the corporation with sufficient authority and ~( responsibility to supervise the effective implementation of all conditions of probation. (4) Complete regular internal audits by the special compliance officer or officers, or other appropriate corporate representatives if no compliance officer has been appointed, to monitor the corporation's implementation of the programs established pursuant to paragraph (1). (5) Submit to regular inspection for purposes of ~~ evaluating corporate compliance with the conditions of probation by one or more officials designated by the court, or by a state or local agency, board, department, or other authority which has jurisdiction over the corporation concerning the law or laws that were violated by the corporation, or by a qualified 01 96 140 TCAL0230970

-5- SB 260 ~ 1 independent monitor designated pursuant to subdivision 2 (f). 3 (6) Subject to the approval of the court and at 4 corporate expense, place a reasonable number of 5 advertisements in major state publications, local 66 publications, or both, describing the offense or offenses ~ 7 committed by the corporation, the penalties imposed by ~ 8 the court for the offense or offenses committed, and the 9 corporation's plan for avoiding future violations. 10 (7) Promptly notify the court of the filing of any 11 indictment or information charging the corporation with 12 criminal conduct similar to the offense for which 13 probation has been ordered, and of any conviction on, or 14 plea entered with respect to, the charge or charges. 15 (e) If the court determines an independent monitor is 16 required to assist the court in monitoring the 17 corporation's compliance with the court's probation 18 order, the court shall request an appropriate regulatory 19 official to serve as the independent monitor. If the court ~20 finds that no appropriate qualified regulatory official is 21. available to serve as independent monitor, the court shall 22 instruct the prosecuting attorney and the corporation to . 23 submit a mutually acceptable selection,for this position. ~ 24 If the prosecuting attorney and the corporation fail to 25 agree on a mutually acceptable independent monitor, 26 they shall submit a list of three mutually acceptable 27 candidates and the court shall select the independent 28 monitor from this list. 29 (f) The regulatory official or independent monitor 30. shall have access to corporate information, data, records, 31 and facilities to the extent reasonably necessary to gather 32 information relevant to monitoring corporate 33 compliance with the conditions : of probation. If the. 34 regulatory official or independent monitor determines 35 that the corporation has violated the conditions of 36 probation, it shap report its findings directly#o the court. 37 Information obtained by the regulatory official as a result 38 of access to corporate information, data, records, or 39 facilities shall be used only for activities within the 40 regulatory official's regulatory authority and the TCAL0230971

260 - 6 - information obtained by an independent monitor shall remain confidential and shall only be communicated to the court. (g) The corporation shall bear all reasonable costs incurred by the independent monitor or regulatory official to perform monitoring activities pursuant to this section; but, in the case of the regulatory official, the ~;. corporation shall bear only those costs incurred for activities that are outside the regulatory official's normal duties. The corporation shall also bear all reasonable fees and expenses of experts engaged by the sentencing court to evaluate remedial programs proposed by the corporation pursuant to paragraph (1) of subdivision (d) or to conduct other activities deemed by the court to be reasonably necessary to ensure compliance with the court's probation order. (h) Nothing in this section shall be construed to require an individual to sacrifice his or her privilege against self-incrimination, and neither the corporation nor any individual shall be required to produce materials protected by the attorney-client privilege or any other materials, including proprietary information, that the sentencing court finds are not related to a condition of probation. ~ (i) The existence of one or more of the following factors shall weigh in favor of the imposition of probation: (1) The corporation has repeatedly been convicted for the same or substantially similar provisions of law in the past three years to a degree which demonstrates to the court that the alternative penalties imposed for those convictions have not been effective in deterring the criminal activities of the corporate defendant. (2) The corporation's management policies or ~ practices encouraged, facilitated, or otherwise substantially contributed to the instant offense, and the corporation has shown little or no commitment to implementing practices, policies, or programs designed to prevent violations of the laws set forth in subdivision (a). (3) The corporation intentionally committed the ~ es 170 TCAL0230972

P :' -7- SB 260 1 violations. 2 (j) The existence of one or more of the following 3 factors shall weigh against the imposition of probation: 4 (1) One or more of the following corporate programs 5 were established as preventative measures by the 6 corporation prior to its conunission of the instant crime: 7 (A) A comprehensive compliance program, 8 supervised by a corporate officer, designed to prevent 9 violations of the laws set forth in subdivision (a). 10 (B) Employee training programs for appropriate 11 corporate employees designed to educate the employees 12 regarding their responsibilities under the laws set forth in 13 subdivision (a). 14 (C) Regular internal audits to monitor the 15 effectiveness of the corporate comprehensive 16 compliance programs established to prevent violations of 17 the laws set forth in subdivision (a). 18 (D) Confidential systems for employee reporting of 19 potential corporate regulatory and statutory violations to 20 corporate management and for protecting persons so 21 reporting from retaliatory employment actions. 22 (E) Special incentive programs that promote and 23 reward-compliance with the laws set forth in subdivision 24 (a). • 25 (2), The voluntary and prompt reporting of the instant 26 offense to appropriate authorities prior to the 27 commencement of a government investigation. 28 (3) The corporation's prompt and reasonable steps to 29 remedy harm caused by the offense. 30 (k) The court shall not order probation pursuant to 31 this section if it finds either of the following: 32 (1) The imposition of other alternative civil or 33 criminal sanctions, without probation, is adequate to, 34 deter similar future violations. 35. (2) The defendant corporation demonstrates, to the 36 satisfaction of the court, that the corporation has, prior to 37 the instant offense and in demonstration of its good faith 38 ` efforts to comply with the law, established all of the 39 corporate programs listed in paragraph (1) of subdivision 40 (j) and has, subsequent to the offense, taken appropriate TCAL0230973

260 -8- additional steps that are designed to prevent repeat ` r offenses of a similar type and severity. (1) If the court finds that a corporation has violated a condition of probation at any time prior to the expiration or termination of probation, the court may order one or more of the following sanctions: (1) Revoke the sentence of probation and impose any ~ fine authorized under the laws violated for which probation was initially ordered that were not imposed at the time of original sentencing. (2) Hold the corporation in contempt, and, after a separate hearing, assess a fine for contempt, not to exceed twenty thousand dollars ($20,000) for each probation violation. (3) Following a hearing before a judge other than the original sentencing judge, hold in contempt any corporate officer or mstwger; es 4efiaeA iet peragrspk {i} ef snbili+aeiee {t}} ef 6ee§err 387-, high-level manager who, having actual notice of the conditions of probation ordered by the court, willfully resists, obstructs, impedes, } or interferes with the performance of any condition o nr willfully hinders the communication of any probation violation to the regulatory official, independent monitor, or the court. "Corporate officer" as used in this paragraph y includes, but is not limited to, those officers specified in subdivision (a) of Section 312. (4) Continue the corporation on a probation, with or without extending the terms or modifying or enlarging the conditions. (m) Upon application of a corporate defendant, after giving notice and an opportunity to respond to the prosecuting attorney, the court may order early termination of probation or reduce the terms or duration of probation if the court finds that the circumstances ~ requiring probation no longer exist and are not likely to recur. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs which may be incurred by a local agency or school district will be ~ TCAL0230974

-9- SB 260 1 incurred because this act creates a new crime or 2 infraction, changes the definition of a crime or infraction, 3 changes the penalty for a crime or infraction, or 4 eliminates a crime or infraction. Notwithstanding Section 5 17580 of the Government Code, unless otherwise 6 specified in this act, the provisions of this act shall become 7 operative on the same date that the act takes effect 8 pursuant to the. California Constitution. TCAL0230975

AOR 26 1991 AMENDED IN SENATE APRIL 10, 1991 SENATE BILL No. 260 Introduced by Senator Hart January 30, 1991 An act to add Section 674 1203.050 to the Penal Code, relating to probation. LEGISLATIVE COL"NSEL:4 DIGEST SR 260, as amended, Hart. Probation: corporations. Existing statutes provide that for purposes of the Penal Code, the word "person" includes a corporation as well as a natural person. Case law has recognized that corporations are proper criminal defendants. This bill would provide fdiA a eer-per-aEiert, as de#tnec-~ ffitta be sentefteea te pFebatierr, wliea the estirt fiiiEle des3gaaEeel eeAdiliel3s e344 arxl d4ermittes Elx4 grebatiert is apprepriaEes ifttzdCliiriea Ee the iffiVesitiert ef afty applieable fxrtes r-estAtAien ~ ereie~:, er efHe~ -=-~:'±*?e require the court, without limitation on its powers to order probation for a corporate defendant pursuant to other law, to consider probation for any corporation convicted of specified violations oflaw. The bill would specify certain enumerated and appropriate terms and conditions of probation, but would not limit it to the enumerated conditions, and the bill would provide the sentencing court with alternative dispositions to impose upon ~ the corporation, if it violates a condition of probation. To the extent that failure to comply with the court order could result in a criminal contempt, the bill would expand the scope of an existing crime, thereby imposing a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated ~ by the state. Statutory provisions establish procedures for 9s so TCAL0230976